In Fontainebleau Florida Hotel, et al. v. Westchester Surplus Lines Insurance Co., et al., No. 2021-016874-CA-01 (Fla. 11th Cir. Ct. June 25, 2023), Mound Cotton’s clients were granted reargument and were awarded judgment on the pleadings on the ground that a group of insured resort hotel entities’ Business Interruption claim must fail as a matter of Florida law.

In ruling for the insurers, Judge Lisa Walsh concluded that the insurance policy’s Business Interruption provision required the insured first to demonstrate that there was “direct physical loss or damage” to property, i.e., that there was physical damage to property that was otherwise “covered herein.” Since the COVID-19 virus does not cause or constitute physical loss or damage to property as a matter of Florida law, the court held that the insureds were unable to establish that the requirements for Business Interruption coverage may be met with respect to their COVID-19 virus claim seeking lost income. The court also concluded that, “even if, theoretically, the [insureds] adequately pled a covered loss or the existence of a covered peril, policy exclusions bar coverage for [their] alleged losses,” specifically including exclusions for contamination, biological materials or agents, microorganisms (explaining that “viruses are a type of microorganism”), as well as an exclusion for “indirect or remote loss or damage.”

Partners Wayne R. Glaubinger and Jared K. Markowitz represented the following insurers in the case: GuideOne National Insurance Co.; Starr Surplus Lines Insurance Co.; AXIS Surplus Insurance Co.; Western World Insurance Co.; Princeton Excess and Surplus Lines Insurance Co.; Certain Underwriters at Lloyd’s, London Subscribing to Policy Number (UMR) B0801193Ul9; and Certain Underwriters at Lloyd’s, London Subscribing to Policy Numbers W275E6190101 and W2754El90101.

This case was covered in Law360.

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